Air New Zealand has won an Employment Relations Authority (ERA) case against its main pilots union over the transfer of better pay conditions offered to members of a rival union.

The New Zealand Air Line Pilots Association (NZALPA) accused Air New Zealand of breaching its collective employment agreement with them by not transferring "more favourable" conditions when the airline bargained with the Federation of Air New Zealand Pilots (FANZP), a smaller union.

The ruling effectively bans the NZALPA from cherry-picking higher pay and better conditions if they are offered to FANZP-aligned pilots.

The employment spat came down to the use of the word "agreement" which Air New Zealand's lawyers said meant an entire collective employment agreement, but NZALPA said meant any particular clause of a rival collective agreement.

The ERA said in its ruling that the airline could not budget or negotiate properly without knowing if pilots from the larger NZALPA would pick out certain parts of the alternative FANZP collective agreement.

NZALPA told the ERA that the underpinning issue was that there was not a level playing field in negotiations between the airline and the two unions.

Captain Garth McGearty, a former industrial director of NZALPA, told the ERA the FANZP negotiations used the "leverage" offered by the earlier collective bargaining efforts of the NZALPA.

McGearty said the two unions were "philosophically different" in that FANZP focused on getting higher salaries whereas NZALPA focused on a more collective approach, seeking a better work-life balance for pilots.

McGearty said the larger union was shedding members who defected to the better-paid FANZP.

Air New Zealand spokeswoman Brigitte Ransom said the airline " welcomes the ERAs determination".